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Caught in the Middle: Publishing’s Other Customers

One of the matters much on my mind recently has been retail book prices for both electronic and print editions. I’ve been knocking the subject around for several months, partially due to the ongoing clamor for free or cheap long-form content (spotlighted most brightly by Chris Anderson’s FREE), partially due to an aborted personal foray into digital publishing, and most recently due to the retail price war currently underway among Amazon, Wal-Mart, Target, Sears and others, where prices of hardcover bestsellers (not remainders) have been pushed below $9.00.

That’s below the retailers’ purchase price in most instances and is clearly unsustainable over time (if not illegal, as the ABA has alleged).

Many have cheered lower prices as a way to grow readership and entice readers to purchase more books (both E and P). After all, readers are getting great deals and publishers (so far) are still getting paid on standard discount schedules. Others have taken a more nuanced look and have written about the consequences of sharply lower prices and ‘de-valuing’ content over time. Bob Miller, Publisher at Harper Studio, describes brilliantly the ‘roadkill’ attendant to deep-deep discounting in “How Much Should Books Cost?”

While I take a back seat to no one in arguing that publishers owe it to readers to provide books in all formats at reasonable prices (e.g., in most cases maintaining print prices on digital books is borderline insulting) and that the customer ultimately drives the business, it’s important to remember that publishers have another set of customers who are in play and upon whom they are equally dependent.

Those customers are called authors and creators and we need to balance their economic realities with those of readers.

Let’s be clear. In most cases, the days of monstrous advances are over. Publishers can’t afford them and the few superstar authors who can command them will at some point recognize their ability to self-publish and distribute far more profitably (and quickly) than their current publishers can. Stephen King is a brand. Nora Roberts is a brand. They don’t need a publisher’s imprimatur or antiquated logistics to sell truckloads of books. Those folks will be fine.

By the same token, writers who do not rely exclusively on income to pay the bills can also self-publish. Tools and services are readily available and mostly easy to use so that the aphorism, “We’re all publishers,” is true. Some will use self-publishing as a stepping stone to more traditional publishing. Others will master it and create work comparable to the best traditional publishing has to offer. A thousand flowers will bloom.

The publishers’ author/customers I worry about are those who fall between these two groups. They are the people who write for a living and who bring us the workhorse books in their categories (from literary fiction to genre fiction to all manner of non-fiction). Their advances have historically been relatively low and their sales relatively modest. They write for major publishers and independents. They write books that backlist and, in a small but very important number, they write really important books that either break out commercially, or say something significant that might not otherwise get said.

We need these writers and a significant component of a publishers’ role is to sustain, encourage and build their careers. When content’s price and value is pushed below a sustainable level for publishers, these writers will suffer. They will be forced to make the economic choice to write less to finance their careers. It’s not enough to say glibly that ‘writers have to write so they will’ or that self-publishing will be their salvation.

We can develop new advance and royalty schemes, profit sharing payments for authors and other ways to carve up receipts from book sales among booksellers, publishers, agents, and creators. MacMillan this week announced a new boilerplate contract pushing author royalties on digital publications still lower. The sad truth is, from the author’s perspective, if the per unit receipts are low enough, it almost doesn’t matter what the split works out to be.

Kirk Biglione wrote recently on another topic that (I paraphrase) ‘in a digital world consumers get what they want.’ At the moment, it seems readers only want lower prices. My hope is that deep-discounting retailers will recognize that books aren’t a product that can be readily substituted with lower-cost imports like many of the products they stock. My further hope is that consumers who demand ever-lower pricing on intellectual property will begin to think beyond the next book they want to buy.

At this moment, I’m not optimistic about either.

Don Linn has a sordid past as a mergers and acquisitions investment banker; cotton and catfish farmer in deepest Mississippi; book distributor (as owner/CEO of Consortium Book Sales & Distribution); publisher (The Taunton Press); serial entrepreneur and general ne’er-do-well. He was a founder of the late Quartet Press and is currently an investor in OR Books, while consulting with and advising other publishing entities. He’s a graduate of Harvard Business School and Vanderbilt University, and is endlessly fascinated with the convergence of technologies with media and the opportunities and business models arising from their collision.

About Don Linn

Don Linn has a sordid past as an investment banker, cotton and catfish farmer, book distributor (as owner/CEO of Consortium Book Sales & Distribution), publisher (The Taunton Press), entrepreneur and general ne’er-do-well. He’s a graduate of Harvard Business School and Vanderbilt University and is endlessly fascinated by books and publishing and their collision with technology. Among other things.

Price and value are not the same thing. Amazon and WalMart can set prices, but they can’t change the value of the content. They can change opinions on what a fair price for a book is, and I think this is really what people are upset about (It’s a different story if what they’re doing is actually illegal, but I’m assuming that isn’t the case).

Selling copies of the content is not the only way an author can make money. If Amazon and WalMart customers are no longer willing to buy books at prices that sustain an author’s career, then the authors need to look to those who put a higher value on their work, and find out how to earn money from them.

“Selling copies of the content is not the only way an author can make money”

That may be true for certain authors who can lecture or sell related merchandise but I would submit that for the overwhelming majority of authors, selling copies of their work is and will remain the dominant source of their writing income unless we evolve to a system of public or private patronage of writers and artists. Very few people want a William Styron T-shirt.

I agree – t-shirts and lectures won’t work for most authors. But it doesn’t have to end there.

I think patronage is a good avenue to pursue. If there are people who value the author’s work very highly, then they should be willing to part with some money to ensure that the author can continue to produce the work.

And there are people eager to support the artists of all sorts that they love. What publishers need to be doing is helping the authors to find those people, connect with them, and provide them with something of value. More and more, that thing of value will not be a copy of the content. You can’t fight the economics of decreasing distribution costs, so why not use them to your advantage?

“What publishers need to be doing is helping the authors to find those people, connect with them, and provide them with something of value.”

I’m the publisher at a very, very small company, and I’m intrigued by your suggestion. I do think patronage, historically, has been an area fraught with difficulties (i.e., unrealistic expectations from patron). But I also know that artists like Zora Neale Hurston and Leonardo Da Vinci, for example, would not have been able to produce work without that patronage.

Still, I’m so intrigued by this idea I will bring it up with my authors as well as some of our investors.

Jay – I don’t see a direct contact for you on your website, but I’d love to continue the discussion. Feel free to send an email through the “Contact Us” link at http://www.manfredmacx.com and I’ll get back to you.

It seems to me that the freemium pressure and the content zero concept–added to the technological (copyright-busting) movement toward the universal digital library–all serve to encircle literature and declare it dead. You’re right that it isn’t enough to say that writers have to write and will write. That will, as always, be dependent upon a) their livelihood and b) their control over the completed work–in its entirety. What writers write in the digital future they just might keep to themselves until they can figure out how to address a) and b). This seems especially important now that the New York houses are unilaterally holding on to all contracts on the argument that a digitized book is ALWAYS “in print”–which seems a contradiction of terms to me–even while lowering the author’s royalty earnings.

I’d add that when the current generation of Brand Authors has lost its collective edge (or its markets), all of the above will make it difficult to replicate those authors’ success. This may be promising in eliminating the elephants from bookstore shelves, but what does it do to the economics of the author-to-reader pathway?

These discussions have almost always begun from the point of view of a mass of undifferentiated readers of digital content. What do they want? What will they do? And the conversation has long been skewed toward content zero BECAUSE it takes place primarily online, where content already has little value in many contexts, where sometimes its worth is only in the extent to which it fills the visual website space it occupies.

If the written word has value as vehicle for idea, image, analysis, context and solution then it’s time for us to begin examining the digital revolution from the point of view of the authors.

Great piece. As an author, I can see the writing on the wall (oh, perhaps I shouldn’t be an author after that line). But as someone who also works in magazines, I would caution publishers and booksellers about value and price before they devalue the printed word altogether. The problems in the magazine and newspaper industry result, for the most part, in devaluing their product in the public’s eye. Airlines did the same thing. Airlines might be an even better cautionary tale. We all went for price point. As customers, where did it get us? Books are not, of course, airlines and as such they are a different kind of product. But in the end, they are bought and sold. And if they no longer have value, because they are sold for something approaching nothing, then the public will value them as such. And authors will become some kind of niche group. The new stonecutters, perhaps.

As a self-publishing author who has worked hard to establish both a brand imprint and myself as a serious writer, I am disheartened by the perception on the part of many online readers that ebooks ought to be “free”, as opposed to buyable content. I have always priced my books and ebooks by what I would expect to pay for them, and with a view to avoid gouging my readers; but in fact there is an increasing number of people who have told me that I have no right to ask for anything. What kind of a market does an author expect to have when confronted by this wrongheaded mode of thinking? I lose enough sleep over the bad economy as it is, and now all this is enough to make me stop writing altogether, if literature is rendered so valueless. Art and music are already treated this way. So then we are left with a growing number of people who know the price of everything, but the value of nothing.

THE LIBRARY–
That is one of the places we go for free content!
SHARE BOOKS–Friends and relatives and coworkers and neighbors have been sharing all sorts of books and newpapers and magazines for years.
HARD COVER–Some just want to buy a hardcover book and will pay for it–if it is available for less, they will pay less if it is convenient, some will go out of their way for it.
BACKLIST–There is backlist and there is backlist and there is a WAY BACK LIST. There are titles still in print during the past 3 or 5 or ten years that still sell well in niche markets
and worth printing or revising. Some are worth selling and printing on demand or as ebooks. Many will remain in obscurity, but at least they are there to unearth when needed or even accidentally–maybe never! Millions of titles will be scanned. Maybe millions will be read. Millions may remain in obscurity.

You have to either be a multi-billion dollar business, a non-profit, a massive volunteer organization or a public institution to support certain things–like scanning millions of books.

Patronage is tricky–some will say publishers influence what is published and that’s bad–but if you like the patron it is good? I know of an author who doesn’t even feel good about our National Endowments–that taking funds can leave an opening to be influenced. Some authors and artists have folks who help support them and it has no effect on their work, except removing some of the stress.

Thousands of books are published every year–is that what is draining publishers? Too many?

As for Google, Amazon, Wal-Mart and Target–books are a commodity or a widget. I’m sure on some level they do appreciate they are bringing books to the masses. They are using our widget as their marketing tool–bait, and we feel exploited.

Lets face it–who wouldn’t want the reading public as their customer. I don’t need to conduct a survey to tell you on average–they are better educated, more affluent, etc and have more disposable income, appreciate quality and value.
Retailers need them walking through the door. Best Buy threw out the welcome mat too.

Publishers will have to adapt to survive, and there will be a new wave of publishers springing up–starting with new models, but they will likely meet somewhere in between for the long term.

Returns policy will have to change. It may evolve–maybe turn to gray for awhile and not be so black and white.
Publishing is slow moving–not always for the wrong reason.
Often when they move it is not always the right direction.
Offset printing is still economical in many cases. We may use less paper for books, but we are using consumable paper goods more and more and more–so the paper industry is just repurposing. Paper is spiking but use goes up and down periodically. There are more short term wasteful uses of paper than printing books. Though I enjoy discussing the future of content and speculating on the future, and sometimes dare I say it is even fun–I also look forward to a day when the delivery mechanism and business model is no longer at the fore of publishing discussions.

What about the cultural center of many towns and villages–the independent bookstore? I own the Merritt Bookstore in Millbrook and Red Hook, New York. I worry not only about my stores but about my communities and the loss of social exchange and sharing of books. Bookselling is a passion not only for the book but for our customers. I am concerned that after the big outlets finish their duel no brick and mortar stores will be left. Even the chains are hurting. Borders is closing more stores as we speak. One of the good things about e readers will be the population drop as people stay in their homes. I love libraries and the work I do with them benefits both the library and the store. Will the libraries be next? As people download into their homes; does the library as we know it become extinct? As to the authors they are the backbone of my store and they must be allowed to create and share their work. If an author spends a year writing, should they not be paid for that book? I always say, “When I have a story about you, you are woven into my soul.” I cherish my customers and the books they buy. I often personally pick books out for them. After owning the Merritt Bookstore for 26 years, I have many wonderful memories and what to continue for another 26.

I couldn’t agree more that price deterioration in general and below-cost pricing is harmful to independent (and even chain) booksellers. That’s presumably why the ABA has taken the action it has and why I cited Bob Miller’s excellent blog post in my original post here. While independents have some work to do on their own, they should not have to deal overcome predatory pricing in their fight to survive.

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